Working alongside staff won’t erase manager’s exemption

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in Leaders & Managers,Management Training

Employers today are facing a barrage of Fair Labor Standards Act (FLSA) lawsuits alleging that they’re misclassifying nonexempt employees as exempt.

One main target: store managers who often work 60 to 70 hours per week for a set salary. Since much of their time is spent working side-by-side with hourly staff, helping serve customers and cleaning up, these employees are claiming that they are nonexempt workers due overtime pay.

The stakes are high. Misclassified managers can be eligible for two years’ worth of back wages (three if the violation was “willful”) at 1.5 times the hourly rate, plus liquidated damages equal to the unpaid wages. That means store managers can collect up to three times their regular rate.

The key to avoiding such FLSA lawsuits: a careful analysis of managers’ actual job duties (not their titles).

For managers to truly be exempt, they must do more than work the floor. Their duties should include tasks that rely on discretion and independent judgment and are clearly related to management, not just serving customers.

But, as a new ruling shows, exempt managers still can spend a good portion of their time performing tasks that look like hourly work, as long as their “primary” duty is management.

Recent case: Kevin Keevican and Michael Terrazas were exempt Starbucks store managers working between 55 and 70 hours per week.

They sued, alleging they should be nonexempt employees who were due overtime. Both estimated they spent up to 80 percent of their time making drinks, running the register and cleaning. But they also were responsible for the overall success of the stores, plus they ordered inventory, hired other baristas and scheduled employees.

The court dismissed their cases, concluding that working side-by-side with their subordinates didn’t mean they, too, were automatically hourly employees. Their primary function was still management. (Mims, et al., v. Starbucks, No. H-05-0791, S.D. TX, 2007)  

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